Kaley v. United States: Landmark Asset Forfeiture Case?

By William Peacock, Esq. on October 9, 2013 2:56 PM

Facing federal charges for reselling used medical equipment that may have belonged to Kerri Kaley's employer, Kerri and her husband, Brian Kaley, took out a home equity loan worth $500,000 in order to cover their legal defense costs. The money was then seized under asset forfeiture laws, with the district court refusing to grant so much as a hearing.

That was certainly a mistake, and the Eleventh Circuit agreed, reversing and remanding to the district court in Kaley I. Instead of a full hearing, where the Kaleys could challenge the indictment, the district court limited the issue to only whether the assets seized could be traced to the alleged offenses. The Kaleys presented no evidence (their defense isn't that they didn't do it -- it's that it wasn't illegal), and later appealed, arguing that a full hearing on the validity of the indictment was required.

The Eleventh Circuit disagreed in Kaley II, stating that the Due Process Clause does not "require the district court to try the case twice."

The Cato Institute, which filed an amicus brief in the case, notes that nearly every circuit court of appeals requires an adversarial pre-trial evidentiary hearing before depriving a defendant of the assets necessary to afford counsel of their choosing. These courts all rely upon administrative law and due process classicMatthews v. Eldridge.

Even the Supreme Court has distinguished Barker's Sixth Amendment speedy trial test from the Fifth Amendment right against Mathews' deprivation of property without due process of law, applying the speedy trial test when an asset forfeiture proceeding was delayed. There was no such delay alleged here.

Still, for the last couple decades, the Eleventh Circuit has stood firm, though the panel in Kaley I noted, in dicta, that "[i]f we were writing on a blank slate today we would be inclined ... to apply the test announced by the Supreme Court in Mathews," and that the panel was "duty bound" to apply binding precedent.

The Case (and Opportunity) for Asset Forfeiture Reform

Adversarial, evidence-based hearings are standard practice in many jurisdictions today, and for good reason: the government has nearly unlimited prosecutorial resources, while defendants, subject to asset forfeiture, have literally nothing. It's the old joke: how much justice can you afford?

Of course, if someone has unlawfully gained assets, it's not exactly fair to let them waste the lot on a defense, leaving nothing for restitution (or for paying the Justice Department's bills).

Mathews requires the court to weigh the individual's property interest (here, funds used for criminal defense are high) against the burden on the government (an evidentiary hearing). And based on the vast majority of circuits adopting Mathews as controlling on the matter, it seems likely that this will be the biggest question in the Supreme Court's opinion.

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